Reuters: Global Markets: China's Zhejiang Shibao jumps over six times on Shenzhen debut

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China's Zhejiang Shibao jumps over six times on Shenzhen debut Nov 2nd 2012, 02:01 SHANGHAI | Thu Nov 1, 2012 10:01pm EDT SHANGHAI (Reuters) - Shares of Chinese auto parts maker Zhejiang Shibao Co Ltd (1057.HK)(002703.SZ) jumped by more six times on its Shenzhen debut on Friday, after the stocks regulator had forced it to drastically scale back its fundraising plan to 38.7 million yuan ($6.2 million). The stellar performance of Shibao, which produces steering products for car makers including Chery Automobile Co Ltd CHERY.UL and a Volkswagen AG (VOWG_p.DE) joint venture in China, has more to do with investors looking to make a quick buck from the reduced share offering than its business outlook. Subscription rates from institutional and retail investors for the reduced offering were over 700 times, the highest since China implemented changes to its IPO mechanism in 2009, according to IFR, a Thomson Reuters publication. Trading of Shibao shares was temporarily halted five minutes into the session after triggering a turnover circuit breaker. It will resume trading at 0231 GMT. Shibao shares traded as high as 17.10 yuan before the suspension compared with its offer price of 2.58 yuan. The hype over the company was created by the China Securities Regulatory Commission (CSRC), after it pressured the company to sell its mainland-traded shares at a level similar to those listed in Hong Kong. The CSRC had been criticised by investors who were burned after buying into share offerings that were priced at lofty valuations and fell sharply after their market debuts. Earlier this year, it introduced rules to curb speculative trading related with share offerings, including setting caps on price moves and turnover rate on the first day of trade. Most recently, the CSRC has stepped in on some share offering plans, including that of Shibao, to keep prices at moderate valuations. In September, China Molybdenum Co Ltd (3993.HK)(603993.SS) was urged by the regulator to downsize its mainland listing by 80 percent. Its shares nearly tripled on Shanghai debut in October. The company raised less than a tenth of the 510 million yuan initially planned, after selling 15 million shares. (Reporting by Shanghai newsroom, Kazunori Takada and Samuel Shen) Link this Share this Digg this Email Reprints

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